Current account back in black in first half of year

Spain posted a current account surplus in the first half of this year for the first time since 1997 on the back of a surge in exports and increased revenues from tourism.

According to figures released Friday by the Bank of Spain, the surplus on the current account — which measures the balance of goods, services and transfers exchanged with the rest of the world — amounted to 1.357 billion euros in the period January-June. In June alone, the surplus amounted to 2.567 billion euros after a balance in Spain’s favor of 2.401 billion in May. In the first half of 2012, Spain booked a deficit of 16.978 billion euros.

The central bank attributed the surplus to a “notable correction in the trade deficit,” most of which was explained by higher exports, and to an improvement in the balance of income and services. The government expects the economy to emerge from recession later this year, largely as a result of the pull of the external sector, which has seen an improvement in its competitiveness as salaries fall.

The National Statistics Institute (INE) on Thursday confirmed that the contraction in the economy slowed to 0.1 percent in the second quarter on a quarterly basis from 0.4 percent in the previous three months.

The surplus on the services account in the first half rose 12.8 percent from a year earlier to 17.063 billion euros as a result of higher revenues from tourism. Tourist receipts in the period were up 5.6 percent at 23.644 billion euros as the number of visitors increased, in part due to troubles in rival destinations such as Egypt.

The merchandise trade deficit in the period narrowed by 82.7 percent to 2.711 billion euros as exports climbed 9.4 percent and imports fell by 1.7 percent. The trade deficit in the first half of 2012 was 15.649 billion euros.

There was also an improvement on the income side where the deficit narrowed 36.8 percent to 6.940 billion euros. However, the deficit on the transfers side, which includes overseas remittances by immigrants, widened 9.5 percent to 6.055 billion euros. The surplus on the capital account, which includes funds received from the European Union, widened to 3.892 billion euros from 2.393 billion a year earlier.

Foreigners also showed increased confidence in the Spanish economy as the withdrawal of funds invested in the country slowed to 541 million euros from 60.059 billion a year earlier.